Smarts (P) Ltd. vs Cit
2007 Latest Caselaw 1716 Del

ORDER

1. Relevant to the assessment year 1980-81, the following two questions of law have been referred for our opinion:

1. Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal ('Tribunal') was justified on facts and in law in declining to allow the additional ground of the assessed which reads as under:

That the authorities below had erred in law in subjecting to assessment of an amount of Rs. 86,500 received by the assessed from sub-letting of the premises as such sub-letting receipts cannot be brought into assessment under the head 'Property' as authorities below had done it because the assessed was not the owner but only a tenant/sub-tenant. That therefore, no part of the income of Rs. 86,500 could be brought into assessment under any of the heads mentioned in Section 14; that alternatively the assessed contend that if their contention aforesaid was not tenable in law, then such income should be brought into assessment only under the head "Business premises' had been utilised in earning the receipts?

2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified on facts and in law in holding that import entitlement received in the course of export business of the assessed and the said having been sold, the resultant income was business income and not a capital receipts?

2. Insofar as the second question is concerned, learned Counsel for the assessed does not press this question and therefore the reference is returned unanswered to this extent.

3. Insofar as the first question is concerned, it appears that assessed had sub-let the premises in its occupation. As a result of the sub-letting it had earned an income of Rs. 86,500. This has been assessed by the assessing officer as income from house property. According to the assessed it ought to have been assessed as business income. It appears that no such argument was taken before the assessing officer nor was any such argument taken before the Commissioner (Appeals). For the first time the assessed sought to raise this argument by way of an additional ground before the Tribunal.

4. The Tribunal by its order dated 12-1-1984 in ITA No. 4078 (Delhi)/1982 did not permit the assessed to raise the additional ground since it involved examination of detailed facts and perusal of documents and also because it was being taken up at that stage for the first time.

5. Without going into the correctness or otherwise of the contention surged by the assessed before the Tribunal, we have examined the issue independently since the reference is more than 20 years old. We find that learned Counsel for the assessed has offered no convincing explanation why the income from the sub-letting of the premises in its control should not be treated as income from house property. The only submission made by learned Counsel for the assessed is that property must be owned by the assessed before the rent received there from can be treated as income from house property. We are unable to agree.

6. We find that the assessed was in full control of the property in its capacity as a tenant. The assessed earned income from sub-letting of the house property. There is nothing to suggest that ownership of the premises is essential for the purposes of levying income-tax, in a situation such as the present, under the head 'Income from house property'.

7. Under the circumstances, the first question is answered in the affirmative that is in favor of the revenue and against the assessed.

8. The reference is disposed of.